Reflections on 20 years of reform: former Australian Ambassador John McCarthy AO

May 7, 2018

Photo by the Australian Institute of International Affairs.

Where were you and can you describe how you felt when you first heard Soeharto had resigned?I was at the Australian Embassy, watching it unfold on television. When it finally happened, I was not too surprised. There had been momentum towards it over the previous two or three months and the Trisakti shootings and the riots that followed set the stage. But when it happened, it happened quickly. Soeharto left with dignity.

What has been the most significant reform of the post-Soeharto era?Reflecting on the past 20 years, the changes brought about by BJ Habibie during his short time in power have been the most significant.

Indonesia moved very quickly to reform the constitution and on the transition to democracy, to narrow the military’s role in government and to decentralise governance. Arguably it gave the legislature a bit too much capacity to impede decisions and decentralisation went too far. But it did move fast.

What has been the biggest disappointment of the post-Soeharto era?The increased prevalence and spread of corruption.

Do you think that the reform process has ended? If so, when?No, the reform process is still ongoing – just take a look at what Minister of Finance Sri Mulyani Indrawati is trying to achieve in the area of economic reform. But it is an uphill battle.

What do you think Indonesia still needs to do to further consolidate democracy?Democracy is there, it just needs to work better. If anything, Indonesia needs to watch out for the excesses of democracy, and by that I mean the hijacking of the system by a populist leader or Islamist forces, as happened in the protests against Basuki “Ahok” Tjahaja Purnama, and then his conviction for blasphemy. There is a risk of democratically elected leader undermining the institutions and values of democracy, as has occurred in places like Turkey, with Recep Tayyip Erdogan.

Democracy is about freedom of choice, institutions and principles. Indonesia is doing okay on choice, but its institutions are weak and its democratic ethos poorly developed.

Is Indonesia a more attractive place for foreign investment than it was under Soeharto?Not in the mining sector! In terms of manufacturing and services, however, it is in a better position. Corruption is a major deterrent for foreign investment, particularly for companies from countries with strong anti-corruption laws that hold them responsible for corruption or bribery committed abroad.

Do you think there is a chance that the military will ever come out of the barracks again?No, but an authoritarian populist could bring the military in behind him with more de facto power. Although it is unlikely, conceivably the military could move against a government that tilted too far towards Islam and denied the Pancasila ethos. But I see no evidence to suggest this could occur at this time.

How has Indonesia’s place in the world changed since 1998?In 1998, the Association of Southeast Asian Nations (ASEAN) was stronger and Indonesia was the engine room of ASEAN. Indonesia is still a vital centre of ASEAN but the grouping is weaker, and Indonesians are likely to place more emphasis on bilateral relations and policies.

In the future, I believe that Indonesia will be preoccupied by adjusting to the rise of China. Ongoing growth in its economy will also give it greater global and regional clout. This will mean that Indonesia’s relationship with Australia will become increasingly asymmetric.